Preferreds strengthen; Fannie, Freddie decline amid Corker bill chatter; Apollo, AmTrust list

By Stephanie N. Rotondo

Phoenix, June 26 - Preferred stocks continued to firm on Wednesday, though overall liquidity was subdued aside from a handful of names.

"Everything caught a bid," a trader said. He commented that he had heard the new issue market would remain quiet for the next couple of weeks in order to "let the market calm down."

Still, "volume was light, all things considered," a market source said.

In the secondary, Fannie Mae and Freddie Mac preferreds continued to sell off during the midweek session following the introduction of the Corker-Warner bill into the Senate on Tuesday.

The bipartisan bill would bring about a liquidation of the two government-sponsored enterprises and replace them with a new entity, Federal Mortgage Insurance Corp. The new organization would function similarly to the Federal Deposit Insurance Corp.

Dramatic fall

Fannie and Freddie remained topical Wednesday as media coverage on the newly introduced Corker-Warner bill continued.

"It was heavy [trading] in Fannie and Freddie after yesterday's news," a source said. "They've fallen pretty dramatically."

Fannie's 8.25% series S fixed-to-floating-rate noncumulative preferreds (OTCBB: FNMAS), for instance, were off 62 cents, or 12.55%, at $4.32. From its $6.55 high on May 29, the paper has fallen "34% in less than a month," the source noted. The last time the issue traded at the current level was April 5.

"That would have been a good thing to short," the source said.

As for Freddie, the 8.375% fixed-to-floating-rate noncumulative perpetual preferreds (OTCBB: FMCKJ) declined 60 cents, or 11.76%, to $4.50.

Apollo, AmTrust list

Among recently priced deals, Apollo Investment Corp.'s $135 million of 6.875% $25-par senior notes due 2043 were admitted to the New York Stock Exchange on Wednesday, as were AmTrust Financial Services Inc.'s $115 million of 6.75% series A noncumulative perpetual preferreds.

The Apollo symbol is "AIY," and AmTrust is "AFSIPA." Apollo was trading at $24.73 at midday, versus opening levels of $24.85. The AmTrust issue was at $23.85, up 60 cents from Tuesday's close.

Apollo priced June 10, and AmTrust came June 4.

Miller plans add-on

Miller Energy Resources Inc. announced its third follow-on offering of 10.75% series C cumulative redeemable preferreds on Wednesday.

The company originally issued $17.13 million on Sept. 28, 2012. Another $15.63 million was sold on Feb. 12, and another $12.5 million on May 7.

The paper (NYSE: MILLPC) traded off 4 cents to $22.06.

One market source wondered why investors would be interested in the securities given that the company "hasn't posted a profit in three or four years."

The Knoxville, Tenn.-based oil and gas company will use proceeds from the best-efforts offering for general corporate purposes.

Glimcher gets upgraded

Glimcher Realty Corp. preferreds got a boost in midweek trading following a rating upgrade from Moody's Investors Service.

The 6.875% series I cumulative redeemable preferreds (NYSE: GRTPI) put on $1.01, or 4.3%, closing at $24.39.

The 7.5% series H cumulative redeemable preferreds (NYSE: GRTPH) earned 47 cents, or 1.9%, ending at $25.20.

The 8.125% series G cumulative redeemable preferreds (NYSE: GRTPG) finished at $25.21, up 23 cents, or 1%.

Moody's moved its rating on the preferreds to B1 from B2, citing improved credit metrics due to deleveraging efforts, better earnings and an unencumbering of assets.

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